Arbitration Cases Weekly Round-Up: 29 January To 4 February, 2023

Court Not Powerless To Appoint Appropriate Arbitral Tribunal, Even If Party Forfeits Its Right Under Arbitration Clause: Bombay High Court

Case Title: PSP Projects Limited versus Bhiwandi Nizampur City Municipal Corp

The Bombay High Court has ruled that even if a party’s right to appoint its nominee in the Arbitral Tribunal as per the arbitration clause, is forfeited because it failed to exercise its right within the statutory period after receiving the notice invoking arbitration, it would not render the Court powerless to appoint an appropriate Arbitral Tribunal, after considering the nature of the disputes.

Calcutta High Court:

Question Of ‘Accord And Satisfaction’ Cannot Be Determined Under Section 11 Of The A&C Act: Calcutta High Court

Case Title: Jhajjar K.T. Transco Pvt Ltd versus Oriental Insurance Company

The High Court of Calcutta has held that the jurisdiction of the Court under Section 11 of the A&C Act is limited to examination of the existence of the arbitration clause and determination of an arbitrable dispute.

The bench of Justice Shekhar B. Saraf relied on the judgment in Mayavati Trading v. Pradyvat Deb Burman (2019) to hold that a Court exercising powers under Section 11 of the A&C Act cannot determine the question of ‘accord and satisfaction’ in view of Section 11(6A) of the Act.

Delhi High Court:

Delhi High Court Upholds Use Of Rule Of Contra Proferentem By Arbitrator While Interpreting Contract

Case Title: Flowmore Ltd versus Skipper Ltd

The Delhi High Court has ruled that, if the arbitrator uses a contract executed between the parties to determine a dispute, the clauses of the contract should, in principle, be construed contra proferentem, i.e., the clauses should be interpreted against the party that drafted it.

The bench of Justice Chandra Dhari Singh remarked that the rule of contra proferentem can be regarded as a ‘general canon’ of interpretation that exists independently of national legal systems.

ONGC V. Afcons By SC Will Not Affect Fee Already Fixed By Arbitration Tribunal: Delhi High Court

Case Title: NHAI versus IJM Gayatri JV

The Supreme Court in ONGC v. Afcons, 2022 LiveLaw (SC) 723 has held that maximum fees that an arbitrator can charge on a claim is Rs. 30 Lakhs.

The High Court of Delhi was considering a situation wherein the fees was fixed in terms of the earlier law. The petitioner challenged the fees so fixed as violative of the Supreme Court order.

The bench of Justice Neena Bansal Krishna held that the maximum amount that an arbitrator could charge was Rs. 49, 87, 500/- in terms of the judgment of the Delhi High Court in Rail Vikas Nigam Ltd. v. Simplex Infrastructure Ltd (2020) before the Supreme Court reduced this amount to Rs. 30 Lakhs in its judgement in ONGC, however, the Supreme Court had not stayed the judgement in Rail Vikas, therefore, it was the prevailing law before the judgment in ONGC was delivered.

‘Seat’ Of Arbitration Would Be Where Facilitation Council Under MSMED Act Conducted Arbitral Proceedings Delhi High Court

Case Title: Ozone Research & Applications (I) Pvt Ltd versus Ahluwalia Contracts (India) Ltd

The Delhi High Court has ruled that the ‘Seat’ of arbitration would be the place where the Facilitation Council under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) has conducted the arbitral proceedings as per the provisions of Section 18(4) of the MSMED Act.

The bench of Justice Prateek Jalan remarked that since there was no arbitration agreement between the parties containing a jurisdiction clause, and since the Facilitation Council under the MSMED Act had assumed jurisdiction and rendered the arbitral award in Nagpur where the supplier was located, in view of Section 18(4), therefore, the seat of arbitration was in Nagpur.

Talks Of Settlement Between Parties After Arbitrator Enters Upon Reference, Would Not Stop Limitation For Passing Award: Delhi High Court

Case Title: M/s Raj Chawla and Co. Stock & Share Brokers versus M/s Nine Media & Information Services Ltd. & Anr.

The Delhi High Court has reiterated that since the the amended provisions of Section 29A (1) of the Arbitration and Conciliation Act, 1996 (A&C Act) are essentially procedural in character, they would apply even to arbitrations pending on the date the amended provision was brought into force.

The bench of Justice Yashwant Varma remarked that talks of settlement between the parties once the Arbitrator enters upon reference, would not stop the limitation period prescribed under Section 29A for passing an arbitral award.

A Final Relief Cannot Be Granted Under Section 9 Of Arbitration and Conciliation Act, 1996: Delhi High Court

Case Title: GMR Pochanpalli Expressways Limited versus NHAI

The High Court of Delhi has held that the Court cannot grant a relief which is final in nature in an application under Section 9 of the A&C Act.

The bench of Justice Chandra Dhari Singh held that relief contemplated under Section 9 of the Act is only interim in nature i.e., ‘in the intervening time’ or ‘provisional’ and it has to be in aid of the enforcement of the award and subject to the final relief given in the award. The Court refused to injunct the respondent from withholding the payment on account of alleged delay as the Court observed that the relief claimed by the petitioner was final in nature as it was neither subject to any award or in aid of any enforcement.

The Court further reiterated that the court cannot either enforce an award, in the garb of interim relief, under Section 9 of the Act or grant an interim relief which is beyond the reliefs granted under the award.

Common Statement Of Claims For Separate But Interlinked Agreements, Can Be Filed Before Arbitral Tribunal: Delhi High Court

Case Title: Pink City Expressways Pvt Ltd versus Aaron Security & Services Pvt Ltd

The Delhi High Court has upheld the arbitral reference made to a common Sole Arbitrator as well as a common State of Claims filed before the Arbitral Tribunal, with respect to a dispute arising under two separate agreements, considering the fact that the agreements were closely interlinked and contained identical Arbitration Clauses, stipulating same conditions.

The bench of Justice Prathiba M. Singh remarked that the services the respondent/claimant was providing under the two agreements, were connected services. Considering the ‘allied nature’ of the two contracts and the common conditions of the Arbitration Clauses, the filing of a common claim petition before the Arbitral Tribunal cannot be faulted with, the Court said.

No-Claim Certificate In Pre-Printed Form And Pre- Condition To The Release Of Payment Amounts To Coercion : Delhi High Court

Case Title: Delhi State Industrial and Infrastructure Development Corporation versus Sukumar Chand Jain

The High Court of Delhi has held that a no-claim certificate is given under coercion if it was in a pre-printed form and a pre-condition to the release of payment under the final bill.

The bench of Justices Vibhu Bakhru and Amit Mahajan held that the dispute between the parties cannot be said to be settled by accord and satisfaction on account of no-claim certificate given by the contractor, if the employer, as a matter of practice, requires all the contractors to furnish a pre-printed no-claim certificate as a pre-condition to release of payment under the final bill